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​Roku Leads the Pack in Over-the-Top Streaming Devices

By By Abigail Alderman, Hearst Corporation Published on 09.15.13

Roku is the leader in the over-the-top streaming device category, providing users with over 1,000 channels.

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As over-the-top streaming devices (systems that stream Internet-based content) continue to gain popularity in the market, Hearst investment Roku is leading the pack with over 1,000 channels and innovative views about the future of TV. Since Hearst’s investment in Roku in May, the two companies have been exploring exciting ways to collaborate. @Hearst sat down with Roku’s General Manager of Content and Services Steve Shannon to hear more about Roku and the great things to come for the company.

@Hearst: Can you tell me a little bit about how Roku began?

Steve Shannon: Roku, which means six in Japanese, is the sixth start up for Roku CEO Anthony Wood, the founder of ReplayTV. Five years ago, Wood launched Roku as the first player to stream Netflix to TV, but it soon became a broader operation. The player evolved from having one content partner to having over 1,000 partners today. Currently, there are four versions of Roku players available—Roku LT, Roku HD, Roku 2 XD and Roku 3.

Roku is now made up of close to 250 employees. We are based in the Silicon Valley town of Saratoga, Calif., and also have a content office in Los Angeles.

@Hearst: For those who don’t know, can you tell me a little bit about Roku streaming players and how they operate?

Shannon: The players are very easy to set up. They are plugged into the TV via an HDMI cord or any type of video connection cord. The device will find the users’ WiFi connection and then there’s a very simple set-up process that is completed on the computer.

Immediately, users can start exploring channels—the mainstream channels are services like Netflix, Amazon, HBO GO and Hulu. Some of those channels have just 10 or 20 videos and others have tens of thousands of videos available. Everything is navigable through Roku’s simple on-screen user interface and remote control. Videos are controlled just like a typical recorded program with the ability to fast forward, pause, etc.

Also, linear channels (standard channels on a TV network that offer the usual non-interactive TV) are becoming increasingly popular. Roku has always been an on demand platform, so this move is a little bit back to the future for us, but a lot of our partners are starting to add channels that allow viewers to tune in live. We’ve just added Time Warner Cable for example, which has 300 linear channels available through the Roku box.

@Hearst: How does Roku differ from other over-the-top streaming services?

Shannon: Roku is the leader in the over-the-top streaming device category. We roughly split the market with Apple TV, but in terms of overall engagement, viewership and usage, we’re much higher. Industry analyst firm Parks Associates recently released research that shows the Roku is used more frequently than Apple TV.

Why are we different from Apple TV? It only has a couple dozen channels and we have 1,000. Also, the Apple TV box is very much a part of the Apple ecosystem. If you want to watch a movie on Apple TV, you can only get in from iTunes. Roku has six or seven different transactional movie stores that users can chose from, including Redbox, Amazon and Blockbuster. Roku has much more breadth of offering than Apple TV and our base model is half the price, so that’s another really important factor.

@Hearst: Can you tell me about Redbox Instant, which launched on Roku this summer?

Shannon: Redbox is a service that competes both with the subscription video on-demand business (i.e. Netflix and Hulu) and the transactional, or one-time, rental type services (i.e. Amazon and Vudu). Redbox combines both of these services into one. Amazon is doing something similar with Amazon Prime, but users have to pay for all of Amazon Prime’s services, which cover much more than just video.

Another point of differentiation for Redbox, is its tie-in with kiosks often located in airports or grocery stores. Customers can reserve DVDs at Redbox kiosks, which is especially helpful because many television shows aren’t available for streaming on the Internet.

@Hearst: What other exciting things are in the works for Roku?

Shannon: On the content front, we’re really excited about working with Hearst because you have a lot of wonderful brands and it sounds like a lot of your great magazines are starting to focus on more video. We’re really looking forward to helping to build video audiences for those brands and exploring other opportunities to collaborate with Hearst.

We’re also excited to be partnering with many of the traditional cable networks to add what are called “TV Everywhere” channels. In the event that users have a cable or satellite subscription, they can get a username and password from their provider that allows them to download apps to watch individual networks. You can imagine how a HBO app might be different from an ESPN app or a Nickelodeon app. This option allows network programmers to deliver video on a user interface that matches its whole brand experience. We’re starting to provide these options in support of traditional paid TV instead of a pure, over-the-top experience.

Our other big initiative is working with original equipment manufacturers, or OEMs. Today we have the Roku ready program where OEMs are building TVs and other devices that use the Roku Streaming Stick. Our next phase will be closer integration with the OEM manufacturers, so you can expect to see news about this in the coming months.

@Hearst: How do you see streaming changing the future of TV watching?

Shannon: At Roku, we believe that in the future all television will be streamed. Traditional broadcast models will ultimately bring themselves over to the Internet so that viewers can get all of the content that they want, whenever they want. It’s a long-term vision because it will take years to get there, but that’s our view of the world. We want to work with the entire content community, including broadcasters, cable networks and operators to find ways to deliver the best content offerings on the Internet with the best content models around. In general, people are going to depend on the Internet for their video for the long-haul and our goal is to be the main platform that streaming happens on. You can think of our approach in terms of what Android is doing with cell phones. It is starting to become the main operating system with Apple off to the side with its own ecosystem. Our goal is to be the streaming operating system for the TV that all of the streaming, monetization and business models grow on top of.

@Hearst: And what do you think will happen to appointment TV watching?

Shannon: We don’t think that appointment watching will go away entirely. Linear television on Roku is surprisingly popular. There’s a community aspect to people convening at the same time to watch a show—it’s such a remarkably sticky experience. Even I find myself turning on the news for a reason that I can’t really even articulate—I just prefer the linear news experience.

We’ve found the same thing with VEVO, a music video channel with a linear aspect. The channel is very popular because people want to know what’s cool in real time. Television will continue to shift in favor of on demand for some time, but I don’t think the linear experience will go away.

Hearst investment Roku is leading the pack with over 1,000 channels and innovative views about the future of TV.